Euroclear France to launch tri-party collateral management service

Euroclear France, the French central securities depository (CSD), is launching a tri-party collateral management service for the French market.

In cooperation with the Banque de France, the new service will collateralise exposures arising from domestic credit operations conducted by the French central bank. Now, more than €2 trillion of securities held in Euroclear France can be used for this purpose. All the collateral management tasks with the new service will be fully automated.

Banque de France supports this initiative, which will provide the financial community with an additional tool to access liquidity within an operational framework. It has been adapted to meet the new risk management and automated processing needs triggered by the latest financial crisis.

“Our arrangement with the Banque de France heralds a new era for euro-zone collateral management efficiency, particularly for central banks and institutions that rely on such credit,” says Valérie Urbain, CEO of Euroclear France, Euroclear Belgium and Euroclear Nederland. “We pay tribute to the Banque de France for having the foresight to ease the use of securities collateral held within the French CSD for monetary policy purposes.”

Euroclear France will begin offering the service early next year by automating the processing of collateral movements associated with interbank repos and other securities financing transactions using securities held in the French CSD as collateral. ?

Euroclear expects to offer the service to the entire Euroclear Settlement of Euronext-zone Securities community. As a result, all interbank repos and securities financing transactions in Belgium, France and the Netherlands will settle in central bank money, supported by the same collateral management system and procedures.

“We look forward to fully extending our tri-party services across the group and to other markets from Europe and beyond,” says Jo Van de Velde, managing director and head of product management at Euroclear. “Our tri-party collateral management services are sufficiently flexible to allow for the mobilisation of collateral wherever it is held, even outside the Euroclear group, to mitigate any credit exposure, including those relating to derivative transactions. Discussions are already taking place with potential partners.”